India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
IL&FS Transportation Networks Ltd
Alert: Takeaways from India Infrastructure Conference, 10-11 Jan
Takeaways from Mumbai — IL&FS Transportation Networks Ltd (ILFT.BO;
Rs279.15; Analyzed Not Rated) presented at our India Infrastructure Mini
Conference 2011 in Mumbai. Below are the key takeaways from management.
Projects Update —Most NHAI projects bagged this year have commenced work
after financial closure, including the two NHAI annuity projects in J&K and Shillong.
The toll project in Narketpally (AP) is likely to achieve financial closure this week.
ITNL expects NHAI float projects of 2000-5000km in the short-term, including a
few tenders this week. The company feels that it requires minimum orders of
Rs50-60bn to sustain its current growth rate. The rise in toll rates for NHAI projects
is typically 3% + 40% of WPI every year. The traffic growth is roughly 8% on
average, thus, ITNL sees roughly 10%-12% nominal growth every year once the
traffic has stabilized. However, on new projects, the company sees growth of 20%-
30% due to diversion of traffic from existing routes.
EBITDA margins to stabilize around 20% — ITNL has a policy of charging fees
on services rendered to its SPV to the tune of ~12%-15% of the total revenues at
the gross level. Of this, 3% is charged upfront and the rest over the construction
period. Due to quarterly variances in the EIBTDA margins depending on the
proportion of fee revenues, the company feels it is better to look at the annual
EBITDA margins.
Finance costs — ITNL is actively looking to restructure the debt for its projects to
a fixed cost structure to lock in interest rates. Recently, it had issued NCDs for
Rs4.65bn against an outstanding debt of Rs3.9bn where the interest rates were
~200bps lower than the prevailing term loan rates. This issuance is only possible
for operational projects since the issue has to be rated and the NHAI annuity
payments fetch a AAA rating. ITNL has locked in fixed rates for the bulk of its debt
and hence does not expect rising interest rates to hurt returns in the short-term.
Airports — ITNL has bagged two airport projects at Shimoga and Gulbarga with
30-year concession periods. These towns are planned to be promoted as
secondary outsourcing destinations by the Karnataka Government. ITNL has
received additional land of ~300 acres each for development, where it plans to
develop IT/ITES offices.
No comments:
Post a Comment